Monthly Archives: March 2015

The Council of Canadians organized a small demo for International Water Day today.

It was a bit odd standing on frozen water looking out over frozen Lake Ramsey, (the largest lake entirely within city limits in the world unless you count Wanapitei) to worry about water. You would think that a water day demonstration should be on a hot day with liquid water. In fact International Water day is primarily about the billions in warmer places with less water. That’s why, for example, the cover of one UN report on water shows three African women in traditional dress – the developing world is where the crises is expected to bite hardest. And in many places in the developing world women are responsible for getting water and transporting it. The burden of growing scarcity is expected to fall especially heavily on women.

There are three main reasons why water for human use is getting scarce in so many parts of the world.

First, population is rising. That is not something we can have much influence over. Canada’s population would be falling except that we have a fairly high immigration rate. The number of immigrants is tiny in terms of world population growth, so we are not significantly relieving the pressure on water supplies on other continents through the population channel.

Second, as development occurs water consumption per person increases. We can’t do much about that for the rest of the world either. Canadian water intensity is actually dropping slightly, and besides even if we conserve the water here in Northern Ontario it doesn’t help anyone Australia or Africa. We can’t really send Lake Ramsey to the barrios of Rio de Janeiro.

The third reason water supply is becoming a problem is because of climate change. This we can help with. If Ontario implements a carbon tax, Canada and the world move a little closer to slowing climate change.

A carbon tax for Ontario is the biggest and most strategic move that we here in Sudbury have. We can’t affect world wide water shortages alone, but as a Province, we in Ontario can swing the country. BC has a carbon tax already. Add the 38% of Canadians in Ontario and we have 51% of Canada. This is the tipping point! This one political decision we make changes the world.

I was actually asked to speak about the economic advantages of moving the main rail line away from the community’s main water source, and I did. I’ll put the main argument in another note soon.

The demonstration was held by the railroad tracks along Ramsey Lake. It was a beautiful sunny day with railroad police making sure we didn’t trespass on the tracks. Not having access to part of the lake because of a railroad is not a world-shattering problem, of course. Even the fact that the line carries oil and other hazardous cargoes that are a threat to our water supply seems small compared to climate change, but these are important local issues, and we can make progress on them too.

I gave a short speech about Bill C51 on Saturday. A couple of people have asked for copies. Here’s the speech: Tell me what you think.

What ISIS Wants:

Thoughts on the Occasion of a Demonstration against Bill C51, March 14, 2015, at the Sudbury Courthouse.

David Robinson

Bill C51 is a big success. Let me repeat that. Bill C51 is a success.

For ISIS.

ISIS doesn’t like our free society. I agree with Mr. Harper about this.

ISIS doesn’t like the freedom we have, the religious tolerance, the multi-culturalism, the secular society, the feminism. ISIS doesn’t like the kind of Canada we have.

ISIS wants to change us.

But it can’t do that itself.

ISIS needs us to make the changes. ISIS needs us to give up or freedoms. ISIS needs us to give up our trust of our neighbours, our privacy, our confidence in ourselves.

ISIS needs us to be afraid.

Mr. Harper is doing what ISIS wants with Bill C51 – he is making us afraid. He is doing what the terrorists are doing: He is spreading fear. He is making us less free.

Mr Harper is being manipulated by ISIS. He has been suckered into introducing legislation that does what ISIS wants: it takes away some of our freedoms, it takes a step in the direction of a police state. It probably even angers some alienated young people and helps to radicalize them. I think Bill C51 will create the home-grown terrorists that Mr. Harper says he wants to fight.

I wish we had a leader who would call on our strength and our trust in each other, on our inclusiveness and our confidence in the Canada we have now. I wish we had l leader rather than a scared little boy for a Prime Minister.

In 2011, when Norwegian crazies killed 77 people – and they were crazies – and we have crazies of our own – the Norwegians didn’t start giving up their freedoms. They stood together. And went on being a free and generous people.

We can do the same. We can live the way we want to, we can smile at each other, we can hug each other. We don’t have to give up the Canada we know because ISIS wants us to.

The biggest single economic opportunity for Sudbury today is probably the redevelopment of the rail lands downtown. The project would boost property values around the core and along Lake Ramsey. It would open up commercial and residential development in the heart of the city. It would let the city solve some major traffic problems.

Where could the rail-yards go? North of the city, providing improved yards, industrial land, and faster, safer passage for CP. Do the total economic gains outweigh the total costs? It sure looks like it – even more now that we are seeing just how risky some of the cargos can be.

The plan to divert CP around the downtown has been around as long as the Maley Drive Extension proposal. A 1972 City study that concluded “that railway relocation is feasible and that many of the objectives desired by the city would be achieved.” That study did not include the benefits of downtown redevlopment. It did not consider the value of imporvements in the rail system. It did not consider the potential for developing new industrial lots, or the possibilitty that a parallel road could divert traffic around the downtown. A 1982 study came to the same conclusion. Removing the yards and the mainline through downtown is already part of the City’s master plan.

So why hasn’t it happened? My theory is that the city fell on hard time in the second half of the 1970’s. Mining employment fell, growth stopped. The city lost faith in itself. The city politicians lost the abilitiy to think big.

Times have changed. The City is in the middle of an economic and cultural renaissance. Will we see a rebirth of political ambiton and imagination to match the changes already underway in other sectors? It seems to me there is hope.

Different carbon prices can look the same! I have just stumbled on a surprisiing fact about cap and trade systems.

Cap and trade inevitably impose costs on producers and government, as well as paying traders (and persumably giving profits to some traders). These are all real social costs that can be almost completely avoided with a simple carbon tax (call it a FEE to be politically correct).

These extra costs can’t be avoided – that means that a permit actually costs the business more than the “carbon price established in the market.” (So much for the argument that carbon markets provide good information about the true cost of abatement.) Research shows these costs are substantial. And there are costs for the govenrment as well.

There are two resuts from recognizing all the transaction costs of cap and trade. The first is that for any given carbon price under cap and trade businesses are actually paying quite a lot more. The real price under cap and trade is higher than it looks. You couid have a higher carbon tax and hurt businesse less!!

The second is that the net revenue available to government at any market price is smaller with cap and trade than with carbon tax. Cap and trade throws government revenue away!! Waste,Waste WASTE!!!

What should a good carbon pricing scheme look like? It makes sense to be clear about what we want before we look at whether a tax or a cap and trade system should be used.

A good policy has to meet technical and political criteria. I would suggest starting with the following criteria.

1) Effective: This is obviously the first requirement.
2) Easy and quick to implement: delays matter more and more,
3) Quick to take effect, since delays matter
4) Reasonably complete coverage of all fossil fuels:
5) Reasonably complete coverage quickly:
6) Cheap to run: We want to minimize transaction costs. They could be very large.
7) Politically and technically easy to raise the price
8) Minimizes leakage
9) Robust to changing political regimes
10) Easy to understand
11) Provides stable prices: this makes it easier to plan investments
12) Provides precise contol of quantities

When I go through this list it is clear that a carbon tax is superior on almost all points. Cap and trade might be in the game on items 8 and 12. On cost, item 6, cap and trade gets toally skunked, and it loses badly on items 1-5.

We could argue about whether to add other criteria, and we could argue about the order of the list.

It is important to realize that these requirements are all about a pricing mechanism. Any pricing system will also raise revenue unless politicians are extremely stupid. I suspect much of the disagreement is around using the revenue from charging a price.

When talk about what to do with the revenue, we are not talking about the pricing system. Once there is money to spread around, a lot of other goals are put on the table. The other goals include encouraging research or technology adoption, improving income redistribution, protecting favoured industries and reducing taxes. Many of these make sense, but there is a danger as we try to get money for our favorite projects we will end up making serious compromises on the price system.

Apparently, David Boyce and our mayor can’t tell the difference between costs and benefits. They crow that the Maley Drive extension will add to the city’s GDP and create jobs. The addition to the GDP is just a measure of the money that will be spent. The so-called jobs are actually just another measure of spending. In fact, many of the jobs will go to construction companies and workers from outside of the city.

If David and Brian were talking about buying a suit, they would be saying the more it costs, the better it fits. That is wrong.

To justify a project, they have to show that the benefits are significantly larger than the costs. They have not done that. By my calculations, the total benefits are much smaller than the expected cost and I expect the cost to double before the project is done. The provincial and the federal governments will not share the cost of overruns, so I expect all hidden costs and overruns to end up as part of city debt. Higher debt means higher taxes, and that will encourage retirees to leave. Maley Drive is a kind of fiscal suicide pact for the city.

But let’s go back to the confused economic theory that says the amount we spend is a good measure of the benefit we get. We would get exactly the same impact on our GDP from spending on a new library and a new art gallery. We even get the same boost if we pay a kid to burn the money. This is technically correct national accounting and a stupid way to run a city.

We have to look at the value for money. What are the benefits that we get?

After several years of traffic problems during construction, we get a very small improvement in traffic flow, increased maintenance and snowplowing costs, and no reduction in total damage to the roads. We get more debt federally, provincially and at the city level.

Maley Drive was originally intended to serve the booming population in the northeast of the city. But the population in the northeast of the city has hardly grown in 40 years. It wasn’t worth doing when the city was booming: it isn’t worth doing now.

The new excuse for building the Maley extension is to get trucks off Lasalle. Why not just charge the trucks a fee for using city roads? After all, there is no law that says taxpayers have to subsidize trucking for the mining companies. A road charge is legal, cheap and actually adds to the city revenues. The money can be used to repair the roads. If we made the fee high enough, the companies might even go back to using the railroad, a solution that is cheaper in the long run and better for the environment.

The Maley Drive extension simply isn’t worth the price. There are cheaper ways to solve the problem it is supposed to fix, and there are better ways to spend the money.

*This letter was published in the Sudbury Star: http://www.thesudburystar.com/2015/03/04/sudbury-letter-maley-drive-fiscal-suicide